Many states are now imposing severance taxes on resources being extracted within their borders. In order to understand the effect of these taxes on the allocation of a mineral over time, assume a stable demand curve.

(a) How would the competitive allocation of an increasing marginal-cost depletable resource be affected by the imposition of a per-unit tax (e.g., $4 per ton) if there exists a constant-marginal-cost substitute?

(b) Comparing the allocation without a tax to one with a tax, in general terms, what are the differences in cumulative amounts extracted and the price paths?